Fund Strategies and Market Commentaries
As of July 15, 2014

Midas Magic is focused primarily on large, global companies, with a current orientation towards conservatively priced value stocks. Consistent with this more conservative orientation, and given unfavorable seasonality, bearish near-euphoric investor sentiment, and some challenging equity valuations, however, the Fund has raised cash to about 6% of net assets. Although the Fund’s portfolio companies typically enjoy global operations in cyclical and economically sensitive sectors such as financial services and technology, the top performing holdings in the recent period were energy related, including Chesapeake Energy Corp., Apache Corporation, and Chevron Corp.  The Fund’s holding of luxury retailer Coach Inc. continued to underperform, as did one of the Fund’s larger holdings – MasterCard Inc.  The overall Fund portfolio, as compared with the S&P 500, has a much greater weighting towards financial services, and less to consumer cyclical industries, in view of the accommodative policy of the U.S. Federal Reserve Bank, and higher historical returns on assets and potential earnings growth.

Midas Fund’s strategy continues to be focused on higher quality senior and intermediate producers of precious metals and other natural resources, including energy.  The Fund’s portfolio is currently composed of generally steady, well financed, metal and energy producing companies, and special development situations. Fluctuating so far this year between $1,240 and $1,380 per ounce, gold prices are expected to move higher should traditional jewelry manufacturing demand increase through the fourth quarter.  Midas Fund anticipates re-positioning the portfolio in view of these potential trends by adding to some current stockholding and introducing new names into the portfolio, while eliminating portfolio cash levels.  New names will likely include those with higher operating and financial leverage.  In the recent period, within the Fund’s global portfolio of mining and energy companies with promising exploration potential, expanding production profiles, increasing cash flow, and/or other special growth features, prices for shares of mine developer Detour Gold Corp. and low cost operators Eldorado Gold Corp. and Agnico-Eagle Mines Ltd. rose the most among the Fund’s holdings.  Share prices of project developer Ivanhoe Mines Ltd. Class A and low cost coal producer Cloud Peak Energy Inc. declined the most.  We believe our patient focus on quality, however, may be rewarded in the long term, and we anticipate better returns should the valuations of mining companies come back in balance with strengthening metal prices.

Midas Perpetual Portfolio’s investment objective is to preserve and increase the purchasing power value of its shares over the long term.  The Fund’s core asset allocation strategy is to invest, consistent with tax planning and lower levels of portfolio turnover, a “Target Percentage” of its total assets in each of the following categories: gold, silver, Swiss franc assets, hard asset securities, and large capitalization growth stocks. The Fund benefitted most in the recent period from its major allocations to gold and silver.  The Fund’s holding of Sociedad Quimica y Minera de Chile, a Chilean chemical and mining company, and the world's largest producer of potassium nitrate, iodine, and lithium, hindered returns.  Although currently the Fund has an over-target allocation to gold and an under-target allocation to silver, combined the precious metal allocation is close to target. Due to under-target allocations to hard asset securities and large capitalization growth stocks, the Fund remains unleveraged.



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